Fifteen States in Double Digit Beer Decline

Source: Beer Business Daily
April 10, 2018

In a startling report, the latest Beer Institute data reveals 15 states have reported double digit beer shipment declines in February, the latest month available.

That’s the most states experiencing that level in decline in modern memory. And a total of 33 states are experiencing declining beer sales. This is on even sale days. (Fortunately, February is a low volume month for beer sales).

Is it weather? Well, certainly the northeast and midwest have seen their share of extended cold weather, but not the West and that’s where most of these double-digit drops are occuring. Chief economist for the BI Michael Uhrich believes some of the steep declines are owed to “severe and pervasive inventory issues throughout the value chain.” A bit of this could be placed on the shoulder of inventory issues coming out of the MillerCoors’ Golden brewery, but I doubt that is much of it.

Here is what we know:

All but one of the 15 states experiencing double-digit declines was located West of the Mississippi (Georgia was the exception).

California and Texas (the top two beer markets for beer) were not included in this cohort, fortunately, but they still saw their shipments decline during the month: with California down 4% and Texas down 6.2% — which represents huge volumes, (see below).

The only state of significant size West of the Mississippi to grow shipments was Arizona, up 4.2% during the month, against easy comps.

THE SUPER BOWL EFFECT. Here is what else we know: Texas has experienced the largest drop in barrelage year-to-date. And Pennsylvania has seen the largest gain. Here are the facts:

1. Houston, the largest city in Texas by far, was still recovering from a debilitating Hurricane, and the weather in Texas has been anything but great so far. Weather in Florida/Georgia, same.
2. Houston hosted a Super Bowl last year. And Georgia, which is also down double digits, had a team playing in the Super Bowl last year.
3. Pennsylvania, home state of the Super Bowl champions this year, was up by the largest barrelage in the country, 75k barrel in February alone, (Philly Philly?).

WEED. But California I think we can definitively put on the legalization in January of recreational weed. Other than wildfires, California’s only major issue regarding beer has been the weed law which passed in January. Shipment trends always lag depletions, because shipments are the first sale in the chain of sales. It would take a month for soft retail sales to show up in shipments, which would explain while California shipments were okay in January and so miserable in February. California was down nearly 70k barrels in February alone, the second largest drop of all fifty states (behind Texas). Weed certainly has an effect. Will it continue? That is a big question.

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